Small and Medium Business

We had the wife of an important employee of an important client call us today and let the receptionist know that this was an emergency.  It was mid day Friday and they were leaving for 2 weeks vacation in the morning and the laptop they would use to connect to the company Citrix was set up with two profiles, the wife’s and the husbands.  The husbands profile would not connect to the internet ever since he installed a wireless headset.  Our engineers were very stressed about how to handle this because the persons house was a good 40 miles from the office and being this was a new client we were not sure if they expected to pay for us to go there and fix a private computer in a persons house.  The wife had said it was an “emergency” so we spent some time finding the decision maker at our client and the answer was, if he wants it fixed he will be responsible for the trip or for bringing it to us.   But it was an Emergency right?  Of course they would want us to come up.  Of course they did not.  What the wife had really meant was it was an “urgency” because they were leaving the next day.  Once we said that he would have to bring it down in order to get it fixed the work around was clearly the better option for them.  The work around was simply to use “her profile” on the laptop and he could get on the company Citrix.  Easy work around, no harm no foul and no need for 40 mile one way trip on the spur of the moment.

Some people might scoff at this as “oh sure the client wanted us to come to Cameron Park but it wasn’t important enough for THEM to actually make that trip”.  I say the real answer is communication.  The customer was sharing the need to have an answer quickly if a reasonable answer was to be found.  Our helpful guys heard this as “gotta have it fast” and translated “it” into fixed and “fast” into all costs, which came out to “Got to have it fast at all costs”.  The wife/customer was not out of bounds agreeing to allow our guys to come to make the drive.  In her  mind if that’s what the expert said was the right thing to do then that’s what they are paid to do is make those kinds of decisions, they are the expert.  But once the decision was made to toss that effort back to the customer, the customer correctly made the decision that the trip wasn’t worth it.  Problem solved in the best way possible given the circumstances.

The greatest impediment to communication is the illusion that it is actually happening.  Make sure when you hear important or urgent that you don’t decide to hear important AND urgent.  It’s the easiest thing to do but it’s also the easiest thing to validate.  Make sure your client understands what you are hearing so they have an opportunity to confirm it.

What does it cost you to provide the revenue generating service or product upon which you and your employees depend for a living and your customers depend for value?  Can you break down that cost into individual parts and determine if, in fact, you are getting the best value for your investment?

While it is likely these questions are of interest to you they are rarely easy questions to answer.  There are some industries though, where if you answer them correctly you can devastate the competition.  These are likely industries where one or more of your raw materials are in short supply and variable in quality and therefore value.  If you can capture the highest value product by paying a little more, then create the finished product for the same or less than your competition then your product can be higher quality at the same or lower cost.  Your competitive edge then is being the preferred customer of the raw material because you can pay more AND the preferred vendor of the finished product because you are the higher quality at the same or lower cost.  How can you achieve this?  By tackling that difficult problem of knowing your input costs through the entire product or service creation better than anyone you compete against. Once you know your costs and how to minimize them, it is also critical that the behaviors that minimize cost through the organization be easily and reliably replicated.

This is where a custom application can provide a big advantage over standard software.  If you use the same software that your competitor does then your competitor has the same opportunities to achieve the cost reductions.  You are limited in your tactics to methods that the standard software will support.  Your advantage is limited to being able to use the standard software better than your competitor.  The barrier to entry, should you succeed, is much lower because once your competitor sees your success they have the tools in hand to replicate that success, they just have to use it.

Custom software, on the other hand, is tailored exactly to your knowledge of your business.  The more information you can input into your software and manipulate the better and more granular your cost knowledge becomes.  When it is clear that doing something differently will make your costs go down or your quality or yield go up then changing the software to behave in that new way should be easier.  More importantly if you find a method that would not be supportable with the standard piece of software you are increasing the barrier to entry for your competition.

A company I worked with several years ago made their living buying a manufactured product that had seen better days (used) and selling pieces of that product in order to make a profit.  There were dozens of ways the product could be resold, whole for salvage, partial for salvage, pieces for reuse, pieces for specific salvage, and many others.  Each type of disposition had it’s own costs.  As a quick example:

• Sale as a whole salvage item
• - $100 = Whole Item Cost
• - $  25 = Labor to process from intake to sale as salvage
• +$150 = Whole Item Value Salvage
• =$  25 Profit
• Single part separation
• +$  75 Single part value separated from the whole
• - $  50 Labor to separate single part
• - $  10 Salvage value decrease of remaining whole
• - $  15 Inventory holding costs (space, time value of money, etc.) for single high value part

Separating the part from the whole becomes at best a break even. But, if you know your costs this accurately, and you can shave $20 off the three costs of breaking out the single part, now you can pay an extra $10 for the supply. Your competitor can not pay that much, or if they do they are paying too much. With overhead they could begin to loose money on every purchase. You either corner the market and make better profit on each of this particular item or you force your competitor to loose money which, over time, will kill them. Multiply this over hundreds of items which all could be separated in multiple ways and you can see that the modeling and management could be come extreme unless you had the proper tools.

While it is still a daunting task to get all the costs itemized, the potential value, especially if you can tightly control this information as a trade secret, is large. By creating a custom application and allowing only a few trusted employees to enter the key values under the proper protection agreements you can create a system that gives you a large competitive advantage AND a huge barrier to entry. The rules of the system are “under the covers” so even the employees who are working closely with the inputs and outputs and modifying the systems values still only see a “black box” when it comes to the rules. These employees might be able to do the same things in spreadsheets at a much lower cost but this makes it much harder to maintain the trade secrecy value of the information and the business far more dependent on that particular individual.

Every company is similar in one way, they all depend on people to get the work done at some level.  People require communication and communication is hard.  I have had the pleasure of working with and looking deeply into many companies in my career and invariably the hardest thing is getting and keeping people working the way you want and expect them too.  My favorite story is the story of the kids put in a row, you whisper a simple phrase in the ear of the child on the end and ask them to whisper it down the line from child to child being very sure they say exactly what they heard.  They will be rewarded at the end if the phrase the last child heard was near the phrase the first child remembers.  Invariably, even with only a very few children in the line, the last child states a phrase that bears little resemblance to the original.  Now think about day to day communications around your company and you will see time and time again where what you thought you said did not result in the behavior or response you intended.  Now multiply that problem among all the people in your organization and all the times that they depend on each other to answer a “how do I do this” question and you may see the problem in a new light.

One answer to this problem is procedure and policy manuals but frequently it is easier to ask the person next to you to repeat the policy than it is to look it up.  Then you repeat it to the next person that asks and guess what, you have just played the children game in real life.  The first person got the policy from another person and repeated it to you EXACTLY as it was stated in the original document correct?  Well, it is likely that it was not perfect, and so on and so on.

Computer programs are the interactive way of forcing consistent behavior. The policies are written into the program and the only way to successfully get the work done is to adhere to the policy or the program stops you, requiring that you “do it correctly”.  This is the equivalent of doing the activity with the book open checking that you did it correctly at each step.  One way to solve this problem is to buy the “standard” program or the framework…..these are the programs that were made for your industry or the SAP like general programs that are meant to be customizable to any industry.

One of the most uncanny aspects is that even if two companies look like they are direct competitors doing exactly the same thing when you look under the covers they are likely very different.  The differences are, in many cases, one of the reasons why some customers go to one company and some to another.  It may not always feel like this is the competitive edge, but the way you do business affects the way you communicate and that affects which customers you will attract.

A standard program forces you to work in a standard way.  To the extent that your niche is determined by the way you do business you put your company at risk.  For some companies the determining factor is not the data that is kept by the computer, in that case it is very clear that a packaged program is just fine.  A dental office, a doctors office, an insurance broker for a large insurance company that has software, perhaps a car dealer and others are businesses that most likely can be handled by a standard program.

But when you do things a little differently from the rest, and your adamant that this is important to you, then you are a candidate for custom application software.  One of our clients services thousands of clients in small transactions but a competitive advantage is customer intimacy.  How do you seem intimate with thousands of customers?  One of the things we built into the workflow was an easy way to remind the owner to send personal notes to clients on the schedule they were used to and other services to help the owner get that accomplished.   The program that all 100 employees work in every day embodies the rules of engagement that the owner has made a part of every transaction.  New agents coming into the business can not do it any other way.  Training requirements are eased, consistency is increased and the customers feel the close relationship without it killing the owners time.  She genuinely cares about her customers and now she can genuinely care about more of them.

To my employees after I made a presentation on a tough economy.

“I made a point last night that this year was going to be tough.  Clearly anyone listening to the news of any sort can not come to any other conclusion.  Google, Apple, Honeywell, the banks, the auto industry, etc., etc. are all laying off large numbers of people.  Locally one of our clients is 1/2 the size it was,  another is down, a third is at least somewhat challenged as evidenced by forced vacation.  It would be silly and self defeating to put our head in the sand and not recognize that this is happening.

That said some of the best times I have had personally and in business have been in tough times.  Tough times bring out the best in good people and we are a bunch of good people.  We are going into this year with 2.5 months of working capital including our line of credit.  Marketing is getting our name out there and Mike is beginning to knock ‘em down.  Although SAC Ear, Nose and Throat did not take services immediately Mike has established a relationship into the account.  I am confident that as Mike keeps working that relationship we have a good chance of getting some labor dollars.  Sacramento Coca Cola is looking for more and more work.   Even our client who is half the size is still asking for our help regularly.  The application we just finished is likely to serve a business 1/2 the size of their largest year but they need us more than ever for the efficiency and solid information we can give them with a proper program.  One of our financial management clients get’s much of their income from a percentage of managed investment accounts, we know that investment accounts are down so their income must be down but they increased their plan level with us to Platinum.

Customer service is going to be key to our success.  It always is but it’s even more important during bad times.  Customer Service means many things, it means professionalism, looking and acting sharp.  It means performing for clients quickly, happily and with enthusiasm.  It means always keeping an eye on the value AS THE CLIENT sees it, of every dollar they pay.  If you don’t know the value they see then ask, clients are happy to tell you.  They are much more happy than if they are surprised.  This value needs to be reinforced at the start by making sure they understand how much something will cost, executing on the expectations you have set and bringing up immediately when you can’t meet those expectations due to discoveries you make on the way.  There is nothing wrong with not knowing everything about everything or all about what you might discover in a diagnosis, just don’t try hiding it, that rarely works.  When you are done with a job the followup enforces the value as well.  What you were asked to do and what you did in an email, work order and/or on the time record must be written to show the value of what you’ve done.

Work with each other, when someone get’s a great review ask them what they did and make it your own.  The next time you’ll be the one who get’s the great recommendation and they will be coming to you.

We have a great opportunity in 2009.  Being a tough economy is part of that great opportunity.  The more we “up our game” the more success we will have.

I look forward eagerly to how each of you will use your creativity and excellence to “up your game” and how that will work together to up all our games.”

Bill Pennock

This is a post about why Application Development has been a big part of my life for the last 25 years.   I started life more as a mechanic, from refrigerators to huge steam plants and journeyman Air Conditioning I loved fixing things.  In the 70’s though I got a job that allowed me to play on an early HP “personal” computer.  Two big cabinets and a monitor and keyboard, single user.  It was an engineering computer and had an early “basic” language on it.  I got hooked but could not afford to do anything with it till years later when the Commodore 64 was introduced.  From then on I could not get away from it.  I programmed early in the morning and late at night.  I taught myself databases and assembler code (the language of the machine itself) and loved it.   Eventually friends asked me to write programs for them and I hacked some things out and made a few bucks.  But one thing I figured out early on, reading the manual and then hacking away till something worked would be fine for awhile but even then there were people developing methodologies and processes to create better programs.  Mostly they worked on bigger programs for bigger companies but the principles were still the same.  So I made it my mission to learn all I could about how “the big boys” did it and bring the relevant amounts of that process and procedure to the work I was doing on small database projects.  In the process I developed a four step process modeled from many of the things I was learning.  I spent hours on the old Compuserve forums learning from the best in the business.  I sent my code out into the world to get criticised by them also.  That was tough, like sending your baby pictures out only to be told they aren’t that cute.  Eventually that changed and I started getting more kudo’s than cut’s thankfully.

Several things I learned over the years.  One, many people who program for a living don’t take the time to learn their craft and they typically have to fix and fix and re-fix problems.  Two, the right amount of project management is required for every project, none is NEVER the right amount.  You must go through the steps of defining what you are going to build, designing the way you are going to build it and then building it according to the design, testing that all the way.  For a small project the time it takes is minimal.  For a larger project, $100k to $500k the process must be more rigorous.  But it MUST be there even for projects you are just doing for fun yourself, or they will fail.  Three, all businesses, even ones that seem exactly alike from the outside, are not alike.  In fact most businesses take on the personality of their leaders and it’s an amazing and fun thing to see.  Four, communication is an art and not easy.  The biggest impediment to communication is the illusion that it’s actually happening.  If you could take a picture of the images in two people’s brain when they were talking you would, I’m sure, be amazed how different they were.  This means that if you are trying to build software, pure idea’s to start with, you have to question, and re-question what you thought you heard in order to get to the real picture.  That is fun and results in very interesting discoveries.  For instance most companies have words they use frequently that mean entirely different things depending on the context but they don’t even recognize it.  As a non-participant though the words cause immediate confusion.  Likely, though, frequently inside the company these same confusions occur but more subtly because people have learned to adjust.  This can be a source of inefficiency and conflict frequently with misunderstanding as to the source.  As an analyst trying to create a model of the business a computer can use I have to be very clear on definitions, computers are not good at situational meanings.  Through this process I have heard more than once, “I know my business better today than I did before you started”.  That is one of the greatest complements I have or will receive.   Last, for now, I frequently see application development that is done by modeling the individual views of each stakeholder and then trying to link those views together.  In fact there is always an underlying model for how the business runs which then can be viewed through various lenses at various angles to show the right person the right information at the right time.  Miss this and the program is inevitably very complex, bulky and not as effective.  Get the underlying model correct and all sorts of changes can occur for years without ever needing a rewrite.

I love teasing out the real underlying model of the business that serves all the stakeholders.  It’s like looking in a fog at first and poking around till you find the substance.  Application development is a passion for me.

Don’t get me wrong I’m a big culprit myself, but I’m working on it.

A most interesting thing happened here the other day.  I asked an employee for a review of a web site in preparation for estimating a small amount of work.  In her enthusiasm to do good work quickly the recipient misread the email as a request to start.  She needed some help from a coworker and started the email with “Do you know about ……..”.  The response came back “First I’ve heard of it…..”  and then a series of statements about what had to be done.   Benign right, except she read the response to mean, “First let me tell you I’ve heard about this project” which rightly meant that anything he said after that could be interpreted as things he knew needed to be done.  What he meant was “That’s the first time I’ve heard of this project”.  In that case the statements following would naturally be taken as “if we go forward here are suggestions of things I think need to be done”.  The difference is subtle enough that the two of them could have numerous conversations after that with each thinking the other was leading the project from knowledge about what needed to be done.  In fact, neither of them did, especially since there was not anything to be done yet, it had not been approved.

So it would be easy to look at this and say that the reader of the “First I’ve heard of it” sentence made the mistake by reading in the comma that wasn’t there as in, “First, I’ve heard of it”.  And you’d be right but……..how much can or do YOU rely on good writing skills in an email?  My experience is the typical email is full of acronyms, emoticons, missing punctuation and misspellings.  Perhaps the people you communicate with are better writers.  In my experience emails are considered fast communication and treated with disrespect when it comes to quality written communication.  And once you read a majority of emails with poor writing it is easy to begin to fall into sloppy reading habits as well.  If you can’t rely on the communication medium then why look at it carefully?

How much productivity does this cost the nation?  I can tell you in our instance it lead to 22 emails back and forth with each of the people thinking the other was “lead”.  Fortunately it was a small issue and the direction paralleled the proper path enough that not much was lost.  There have been other cases where that has not been the result.

There are some who would say that definitions and punctuation and syntax are subjective.  I would say that to the extent that is true we degrade the very foundation of their reason for existence.  The only reason a word has a definition is so when you say the word it invokes the same thought in my mind as it does in yours.  Same for punctuation and syntax.

In the worst case these small errors cause more back and forth than was neccessary and confuse simple tasks.  In the worst case a statement that was said with one meaning could be taken as completely the opposite by the reader and elicit strong negative emotions.  If the reader reacts it becomes hard to back down and bad feelings continue even if you point out the original intent of your statement.

You will do yourself and those you write a big service if you take a few moments to think about good writing technique in your emails.  You will loose less time with missed communications.   You could even avoid an arguement or two.

The business of Application Design especially depends on great communication.  What great communication means to us though, after many years of doing this with dozens or hundreds of people, is pay attention to the above statement.  Remember the kids game where you line them up and whisper something in the ear of the first kid, then have them whisper it to the next and the next and then write down what the phrase was the last kid heard.  Invariably it bares little resembelance to the phrase from the beginning.  Well if you’ve ever tried it with adults it doesn’t usually work much better.  I don’t know what it is that makes this so hard, a psychologist or philosopher might have an idea but I’m not sure it really matters.  The fact that it happens is the fact that needs attention.

If you and I talk for 10 minutes about a subject you may know the pictures that you think you have put in my mind and likewise I may know the pictures I think you are envisioning.  If you assume that what you are picturing is what I am picturing exactly you are nearly certainly guaranteed bad communication.  That is what I mean by the illusion that it is actually happening.  Skepticism is key to good communication.  I can be very sure that the picture I think I am painting for you is not the one you are seeing.  The difference may be a subtle or a not so subtle amount.

I try to keep in mind always that the more I am aware of this problem the more I can ask you to restate the picture and listen for differences that indicate the discrepancy.  The more my listener is aware the more they can look for sentences or words that don’t exactly fit and stop me to ask.  The more we do that exercise the more chance both of us have to hone in on the same vision.  We can only do that if we believe that communication is difficult and unlikely to happen without careful attention.  Success comes when we let go of the illusion that communication is actually happening.

About once a month I get into a conversation that just starts going the wrong way.  The response I get is not what I expected by a large degree, usually I notice it because I’m expecting a good response and get a negative one.  Sometimes these are very difficult to reverse because a word that you intended to mean one thing has been interpreted to mean something entirely different.  Sometimes the conversation can go a dozen sentences or more from that point of discrepency with both parties thinking they are saying the same thing.  Yet if there were bubbles above their heads showing thoughts they would be diametrically opposed and it would be easy to see why.  Of course you’d laugh about that and draw it up as a cartoon in the New Yorker.  Unfortunately in the real world if you don’t pay very close attention things can turn out poorly.

Language is a hugely powerful tool.  Definitions must be agreed upon or the language does not work.  The more you pay attention to the language of your life the more benefit you will get from the rich communications that can occur when language is used concisely.

The other day I was talking to a prospective Client about the future of their business. We had just delivered a list of services we could provide, some of which were not exactly what they asked for but items we discovered that needed to be addressed. These items were less costly than what they had asked for but would quickly answer the most immediate needs. During the conversation this potential client paid us what I consider a very large compliment. He said we had amazed him in how we had personalized our relationship to his organization.

From the time I started my own programming/consulting business as a sole proprietor more than 19 years ago I have been driven to partner with our Clients in a very personal way. As Squaretree has grown we have endeavored to continue to pursue that type of relationship. An IT resource is a big investment for most companies. It is an investment that comes with large benefits and some risks. From day one I have personalized our Clients’ issues and ask all my employees to do the same. I believe that your experience of this will be what makes Squaretree stand out as the premier provider with which you work.

In 1992, Larry Mandelberg and I were contemplating starting a business together. We needed to find a name that both of us liked. We spent months coming up with name after name: ones that he liked and I didn’t, and others that I thought were great that he hated. Twice we found names that we both liked and our wives hated them.

The evening before we were to show at a conference, we still didn’t have a company name or business cards. Of course, neither of us wanted to use the other person’s current company name so we had to do something. We decided to wing it and just randomly try words hoping for two that combined would create the feeling of what we wanted to create. The name had to look good on hand made cards in script print.

We both were in agreement that we wanted our company to focus on using technology to benefit business with the focus on business. This meant that we didn’t want to use some whiz-bang cute computer techie name. We wanted it to emphasize stability and longevity. We shot some words back and forth and decided to try starting with the word Square, as in “square shooter”, “he’s a square guy”, and “they treated us fair and square”. Besides, the S and q looked good together.

Next we thought we needed a word with a lower case riser like l or t. Soon we tried the word tree and both thought that this word added a feeling of longevity and solidity and reliability.

Thus Squaretree was born. We both figured we could change it as soon as we wanted but at least we had cards for the show. The more we used it, though, the more we liked it. Now over a decade later the name has stuck.

Larry has since left the company for other pursuits but the name lives on and, more importantly, says just what I want it to say. While the two words together have no real meaning I think it creates a feeling of honesty, integrity and reliability. These values are what I want Squaretree to symbolize: honesty, integrity and reliability in using technology to help businesses and organzations realize the most value from their technology investments.